Nokia Slashed More Than 6,000 Jobs in 2020

The human financial cost of Nokia’s turbulent 2020 was made crushingly clear this week in the company’s annual report. More than 6,000 employees, or 6.4% of Nokia’s workforce at the beginning of 2020, were cut or laid off by the company during the year. The human financial cost of Nokia’s turbulent 2020 was made crushingly clear this week in the company’s annual report. More than 6,000 employees, or 6.4% of Nokia’s workforce at the beginning of 2020, were cut or laid off by the company during the year. Nokia previously slashed almost 5,000 jobs, or 4.6% of its workforce, in 2019. It ended 2020 with 92,039 employees and cut a total of 6,283 jobs during the year. Worse yet for Nokia staffers, more job cuts are likely as a three-year turnaround plan initiated by CEO Pekka Lundmark at the beginning of 2021 has increased pressure on each of its business segments to grow and prove technology leadership in their respective markets. Lundmark, just four months after taking the helm, warned that underperforming or lagging businesses could be on the chopping block. “Technology leadership is paramount if you want to deliver economic value” and while the number of spots for leaders in each business segment varies, “usually it’s two, sometimes three, in exceptional cases maybe four,” he said during a presentation in late 2020. The company’s leader is also shrinking its executive team from 17 people to 11, and moving at least 14,000 employees from corporate functions to Nokia’s four new business groups. Speculation is rampant about which businesses Nokia could dispose of via an outright sale or spin-off arrangement, and analysts claim there is particular pressure on Nokia to improve the performance of its optical, wireline, and IP routing businesses. The Finnish vendor could be heading for a split or at least become a smaller outfit than it is today. It has shed more than 11,000 jobs since 2019, but, in a bit of good news for employees that remain, average employee pay jumped 6% year-over-year to $78,410 during 2020, the company reported. Nokia also addressed unequal pay among employees, adding that it continues to “annually monitor pay equity and fund special remediation increases as necessary, to ensure that the unexplained pay gap which was first closed in 2019, stays closed in 2020 and in future years.” In 2016, the company set a target to increase the percentage of women in leadership positions by at least 25% by the end of 2020, but it failed to reach that goal. It ended 2020 with 23.5% of its leadership team’s positions held by women, and the share of women in leadership positions throughout the company was 15.3% at the end of the year.  “Each business group has been able to successfully hire and retain its women employees but the pipeline of women to senior positions is still weak. Most of the women in the company still find themselves in middle management. Hence, we were not able to reach the target,” the company wrote in its annual report.  Among its current workforce, 42% (or almost 39,000 employees) are based in its home base of Finland and the rest of Europe. The rest of Nokia’s employees are spread across the globe with 20,511 employees in Asia Pacific; 13,749 employees in China; 12,002 employees in North America; 3,674 employees in Latin America; and 3,319 employees in the Middle East and Africa. Nokia’s entire business declined in 2020, and that was reflected in decreased sales across all of its business units and most geographies.  Networks, the company’s primary business unit, reported a 7% year-over-year decline in revenues of $20 billion for the year. Within that segment, Mobile Access dipped 9%, Fixed Access fell 6%, IP Routing slid 5%, and Optical Networks declined by 3%. Revenue in Nokia’s Software unit declined 4% to almost $3.17 billion, and its Technologies division reported a 6% slide to $1.67 billion. Sales were also down 32% in Latin America to $1.19 billion; 25% in China to $1.64 billion; and 16% in Asia Pacific to $4.58 billion. Nokia’s 2020 revenues were up 2% in North America, its largest market, at almost $8.49 billion; and flat in Europe, its second largest market, at almost $7.89 billion. Sales increased 1% in the Middle East and Africa to $2.25 billion. Nokia also lost a significant 5G RAN contract with Verizon last year when that operator opted to shift that business to Samsung in a massive $6.64 billion deal. However, Nokia kicked off 2021 on a more positive note when it signed a new five-year 5G RAN contract with T-Mobile US. “2020 was the year businesses realized that the old adage of ‘things must change to remain the same’ has never been more true,” Lundmark wrote in the annual report. “The pandemic accelerated the need for widespread digitalization and automation, leading to the increasing importance of critical networks — networks that combine flexibility with carrier-grade performance.” Nokia’s executive team “launched a strategic analysis into these industry trends, which found that value would increasingly move away from monolithic systems towards software, silicon, and services with the importance of virtualization, cloud-native architecture, and open interfaces becoming ever greater,” he explained. “It was clear to us that to support our customers through these changes and to better position Nokia for new opportunities we would also need to change.”  Lundmark last month said he expects Nokia to regain its 5G competitives by 2022.